Whether it’s generative artificial intelligence (AI), machine learning, or just keeping important documents in the cloud as opposed to a dusty filing cabinet three doors down from accounting, successfully implementing digital transformation is what keeps modern businesses ahead of their competition.
Gartner recently reported that 87% of business leaders place digital transformation high on their agenda, and according to Deloitte, the correct application of digital transformation strategies could unlock as much as US$1.25 trillion in value across the Fortune 500. However, the same report found that “the wrong combinations can erode market value, putting more than US$1.5 trillion at risk.”
Identifying the risks
While a huge majority of organisations are attempting to embrace digital transformation, there’s a significant difference between starting a digital transformation project and successfully completing it. In the finance sector—one of the most enthusiastically digitising industries—a report by McKinsey found that, between 2001 and 2021, only 30% of banks that underwent a digital transformation reported successfully implementing their digital strategy, with the majority falling short of their stated objectives. This low success rate, McKinsey analysts note, holds true across most industries.
So, why do the majority of digital transformation efforts fall short of their intended targets, costing organisations money and valuable time? According to experts, it’s an organisation’s culture that may play a more important role in its ability to adopt new technology than IT budgets, digital savviness, or the technology itself. Dr Jonathan Reichental, an adjunct professor at the University of San Francisco, believes this “serious disconnect between intentions and outcomes” is due to the all-too-frequent absence of a positive culture. He goes on to quote management consultant Peter Drucker, who said “culture eats strategy for breakfast.”
Across multiple disciplines, from supply chain to cybersecurity, decision-makers are waking up to the fact that digital transformation needs (and, some might argue, can only take place) in a culture willing to embrace it. “The technology challenges we can solve. Often our most significant hurdle is company culture,” explains Gary Parker, the CTO in Residence at cybersecurity firm Zscale.
Building a culture that’s open to digital transformation
According to various consultants at Deloitte, McKinsey, and Accenture (many of whom are probably out of a job right now, so maybe take their wisdom with a pinch of salt), there are a number of ways business leaders can nudge their company culture in the right direction to clear the way for a successful digital transformation that sticks.
Assess cultural risk by initiating an organisation-wide program that can effectively analyse your organisation’s existing culture. This will help detect areas where changes need to be made, obviate challenges, and implement behavioural changes essential for your digital transformation to be a success.
Next, attract top tech talent to avoid outsourcing the digital transformation. In what I can only describe as an extremely evolved piece of advice from business consultants, Deloitte analysts emphasise the need to attract and retain top-tier tech talent internally rather than outsourcing transformation efforts.
Lastly, “overinvest” in your culture shift. Prioritise investment in cultural transformation, even if not directly tied to technological advancements or short term revenue. Recognise that fostering a supportive and innovative environment is foundational to successful digital initiatives. Allocate resources generously to initiatives promoting cultural evolution, acknowledging their pivotal role in driving sustainable digital transformation.
“Ultimately, it is people that make a company. Regardless of what your company does or who your customers are, it is the people behind that logo or brand who will help you bring revolutionary change and success to your organisation,” writes Parker. “Don’t dip a toe into change. Lead and leap head first, and don’t forget to bring your people along with you.”
- Digital Strategy
- People & Culture
